NEVADA COUNTY SHORT SALE VS FORECLOSURE

Many Nevada County homeowners maybe looking at a foreclosure or short sale and be wondering of the impact to their credit score. Although short sales have a reputation for being easier on credit scores than foreclosures, “that’s a fairly common misperception,” said Rod Griffin, the director of consumer and public education at Experian, one of the major credit bureaus told the New York Times .

If there is a difference in impact, he said, it is slight. Both short sales and foreclosures remain on the credit report for seven years — but foreclosures don’t appear until the legal paperwork is filed, and that could take months, Mr. Griffin said.

The effect was measured in an analysis by VantageScore, a provider of credit scores used by lenders. The higher the credit rating a consumer has, the more points he or she would lose in a short sale.

If consumers started with, say, an 830 score, they would most likely lose 100 to 110 points from a short sale, 120 to 130 points from a foreclosure.

But a homeowner with a 625 score, who is behind on his mortgage and some credit card payments, would lose 15 to 25 points from a short sale and 10 to 20 points from a foreclosure, the VantageScore analysis shows.

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One major downside to a short sale has been the length of time it takes to process the transaction. “I have done short sales in 60 days, and I’ve also had them take a year,” said Peter J. Goodman, a real estate lawyer in Brooklyn. He typically tells clients to expect them to take 90 to 120 days.

Short sales today are being completed faster than they were a couple of years ago, Mr. McHugh said. About one-fourth of his mortgage business comes from short sales; five years ago it was almost zero.    

Scott Hopper - Realtor, 530.477.2277